Fed Responds to Declining Paper Check Volumes
As the transition from paper checks to electronic payment methods accelerates, the Federal Reserve Banks have responded with a plan, announced Aug. 2, to discontinue check processing at nine locations throughout the nation. Even with these changes, the Fed will continue providing check services to financial institutions nationwide.
Responding to change
By decreasing the number of check-processing locations and
increasing capacity at other sites, Reserve Banks will reduce
their check service operating costs in line with the rapid
and ongoing shift in consumer and business preferences from
paper checks to electronic payment methods. These relocations will take place through 2005 and
early 2006. Reserve Banks will soon announce the schedule
for implementing the restructure.
In 2003, Reserve Banks discontinued check processing at 13 locations, going from 45 to 32 processing sites. After the changes announced in August are complete in early 2006, the Reserve Banks will process checks at 23 locations nationwide.
The latest restructuring will affect check operations at the following offices:
|Check operations will close
||Check operations will move to
||Windsor Locks, Conn.
|Oklahoma City, Okla.
|Salt Lake City, Utah
These changes are intended to improve the efficiency of our check operations while maintaining high-quality check services to depository institutions nationwide, said Gary Stern, chairman of the Reserve Banks Financial Services Policy Committee and president of the Federal Reserve Bank of Minneapolis. But streamlining our check infrastructure is only part of the Reserve Banks strategy to improve efficiency; for example, we are also launching new products and services to support the implementation of the Check 21 Act in October 2004.
While checks remain the countrys most popular form of noncash retail payment, they now make up only 60 percent of noncash retail activity compared with 85 percent in 1979, Fed studies show. In 2001, another study revealed that about 42 billion checks were written in the United States in 2000, down from about 50 billion in 1995.
More declines foreseen
In 2003, the Reserve Banks check volume fell by about 5 percent. During 2004, the decline has accelerated, and such declines are expected to continue in the coming years.
Customers should contact their local business development representatives with any questions.